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In the world of development and humanitarian efforts, aid effectiveness is one of the most important concepts. Without proper understanding and implementation of aid effectiveness measures, any effort to help developing countries is bound to be plagued by confusion, waste, and corruption, if not outright failure. To begin to fully understand the world of aid effectiveness, you need to first get an idea of what it entails, what difficulties it involves, and how the leading experts have elected to handle those obstacles.

What exactly is aid effectiveness?
At its core, aid effectiveness is the disparity between the input of funding and the output of development and tangible benefits. Some loss in the complex process of fostering development is impossible to avoid, but some negative factors can be mitigated to improve aid effectiveness. By devising and using methods to eliminate those factors, one can improve aid effectiveness.

For example, the attachment of conditions to funding is a common and effective means of ensuring that funding is used properly. By forcing the recipients of funds to adhere to strict guidelines, developmental efforts have a greater degree of control over where their money goes after it is distributed. If the recipient wants to receive more funding in the future, then they must follow the prescribed rules or face dire consequences.
Rather than only using negative feedback systems, many also engage in capacity building. One of the key problems with any development effort is that the skilled specialists assisting in the aid will eventually leave. Even if they stay, they will likely be far too few in number to sustain development indefinitely. However, by nurturing local talent, building up local infrastructure, and passing on that specialized knowledge to members of the community, you can greatly improve the longevity of the administered aid. This is collectively known as capacity building.

What are some of the obstacles to increasing aid effectiveness?
Though every developing region has its own relationship with development and an accompanying selection of problems, many share certain attributes that pose a problem for aid effectiveness. On the other side of the equation, there are often problems with the sources of aid as well.

Fragmentation of Projects
To start with, the trend away from fewer and larger projects limits aid effectiveness in certain areas. With massive projects that involve thousands of individuals and millions of dollars, it’s fairly easy to coordinate and effect lasting change. However, recent trends have moved away from that and towards a higher number of development projects that are smaller in scope and size. With this new system, coordinating between projects, even those that are close in location or focus, becomes difficult or even impossible. Furthermore, even those these more numerous projects can address more places or problems in a shorter window of time, there’s a lower chance of their work producing lasting results.

Fragmentation also has the negative side effect of reducing donor knowledge or at least making it harder for donors to know exactly what they are donating to. Many smaller projects are run with less professional organization than larger endeavors, leading them to lack accurate predictions and statistics for exactly how a donor’s funds may be used. In addition, even if they have the necessary data, they may lack the means and expertise to quickly and concisely inform potential donors of how their money will be spent.

The Nature of Aid
The very nature of global aid efforts poses a hurdle for many of the involved parties. The sheer number of steps and people involved in enticing donors, gathering funds, distributing aid, and tracking results can impair the very processes that it means to help.

For example, a development project may aim to improve a village’s self-reliance. It may come with a number of conditions to ensure compliance. If the conditions are too burdensome, then the village may be forced to sacrifice other aspects of its development and welfare in order to meet those requirements. Ultimately, the loss may even outweigh the positives of the development project itself, meaning that the aid effort had a net negative effort on those that it was meant to help.

At the same time, the inherent distance between donors and recipients can make it difficult for potential investors to get a good idea of how their money will be used and who will benefit from it. Development programs can live or die based on how well they attract donors and convey the benefits of their work, but effectiveness in advertising doesn’t necessarily correspond to efficiency.

Tied Aid
Many development efforts lead to recipients purchasing goods from donor countries. On one hand, this can be a financial incentive for donors to take part in aid projects. The opportunity to establish long-term trade can enable projects that might otherwise not have received sufficient interest.
On the other hand, tied aid can lead to overemphasis on the commercial aspect of the project. If the profits of donors take precedence over the development of the target region in question, then the project may do more harm than good.

What efforts have been taken to overcome those obstacles?
On a global scale, there have been a number of organizations, summits, and agreements in the hopes of increasing aid effectiveness. Though aid effectiveness has been studied for much longer as an aspect of development aid in general, it was only in 2003 that formal efforts to tackle the subject on a global scale were initiated.

The OECD
The Organization for Economic Co-operation and Development is one of the oldest and largest bodies that handles coordination between international aid efforts. While it was established in 1961, it was only in 2003 that the OECD created the Development Assistance Committee to address aid effectiveness measures. The DAC itself hosts a variety of forums to help facilitate understanding a build a cohesive plan for international cooperation.

One such forum is the Working Party on Aid Effectiveness. There, adherence to targets and global measures of progress are examined from each of the major perspectives. Additionally, it tracks and analyzes statistics in-house in order to help associated development efforts maximize their impact.

Paris Declaration
In 2005, the Paris Declaration signified a large step forward in the coordination of aid efforts between donors and developing countries. It proclaimed heavy support for a transfer of influence from the donors to the recipients in the ultimate hopes that developing countries would be able to create their own aid programs and reduce reliance on the whims of foreign donors.
More concretely, the Paris Declaration laid out a system for tracking progress and charting the effectiveness of aid efforts. With this, standardizing the idea of developmental progress became much more realistic, allowing for greater cooperation between different programs.
The targets set in the Paris Declaration were designed to be met by 2010. While many of the goals went unmet, significant progress was made nonetheless. These failures were perhaps even more important than the successes because they highlighted exactly where additional efforts needed to be made.

The International Health Partnership
In 2007, the International Health Partnership signed a Global Compact for improving global health. Though many development efforts require a balancing act of skilled specialists, fund management, and strategic application of resources, health initiatives add the weight of human life.
The IHP is designed to improve cooperation within this very narrow field in the interest of saving lives. By organizing and acting as an intermediary between the various participants in the aid process, it ultimately intends to build ties between individual developing countries and health organizations, as well as improve local health services to the point where outside aid is no longer required.

Third High Level Forum
At the Third High Level Forum in 2008, a number of shifts in the landscape of global development were addressed. The shift of countries such as China and India from developing to donor was becoming more pronounced and even countries still far from leaving the developing category were taking greater control over the aid process, as was originally intended only three years earlier in Paris Declaration.
As far as the future was concerned, the Third High Level Forum emphasized a focus on further increasing the role of developing countries as well as expanding the process to include previously underutilized elements such as middle-income countries and civil society organizations. Furthermore, focus was placed on the necessity of results, both in terms of actual progress and evidence for use in reassuring existing donors and enticing new ones.

Fourth High Level Forum
At the Fourth High Level Forum in 2011, the commitment to assisting countries in transitioning from developing to developed was reaffirmed. Of particular note was the role played by South Korea, the host of the forum. South Korea’s recent development and shift from recipient to donor of aid made it a prime example of study for other countries that wished to follow in their footsteps, for donors that wished to see concrete results, and organizers of aid programs that needed a template for a successful transition to follow.The Global Partnership for Effective Development Cooperation
Created at the Fourth High Level Forum, the GPEDC is a massive collaboration between countries and organizations. Aside from providing support to members, it also monitors progress made towards the targets set at the Fourth High Level Forum. Aside from standard measurements of progress, there is also a focus placed on gender equality and increased transparency.
From monitoring progress towards the goals set forth at the GPEDC, several key needs were identified. Instead of relying on donors and outsiders to monitor the progress of development, recipient countries need to develop the infrastructure and personnel necessary to observe the impacts themselves.The State of Aid Effectiveness Today
While neither the targets set in the Paris Declaration or at the subsequent forums were met with complete success, trends have pointed towards gradual improvement in many areas. Developing countries are beginning to take a much greater role in the process, accelerating their transitions away from being net recipients and towards being self-sufficient donors. As goals are met and targets are recalibrated every few years, new issues and measures of progress are taken into account.
In the future, there may be even more radical shifts in the world of aid effectiveness. More and more countries will become donors, potentially resulting in a surplus of donors and deficit of recipients. As more studies are conducted and more targets are set and evaluated, understanding of how best to handle aid effectiveness problems will grow.